Bank of America (BAC)

This is “coming out of the blue”. Has $2 trillion in assets. There is a lot of potential here. Once these banks are deemed to have enough capital, they are going to start to raise their dividend. This is where your portfolio should be. A lot cheaper than Canadian banks, with a lot more upside, plus you have the US$ exposure. You should be okay for the next 3-5 years.

Had looked at this a few years ago, but decided to go with J.P. Morgan (JPM-N) instead. Probably would have done better with this one, but found comfort and safety with J.P. Morgan’s balance sheet, rising dividend and its share buyback. Feels this one has more torque and more leverage, if things are going to improve. A wildcard is rising interest rates.

10% of all deposits in the US are with them. Stock has not done much at all this year, but you should see improvements in the company next year. They have a great retail and commercial franchise, great investment banking business and a great wealth management business. They will continue to generate lots of capital and then buy back shares and increase the dividend with it.

This has gone through the mill in the last few years. The US banks did a great job in recapitalizing their balance sheets. Has worked its way through all its lawsuits and the US economy is steadily getting better. This bank is getting slowly and steadily better along with it. There is, and continues to be, outsized opportunity for dividend growth.

Every company, sector and industry has valuation metrics that they respond best to. The banks, because they tend to be quite cyclical, don’t respond well to earnings. The thing to look for in banks is Book Value, or more specifically tangible BV. Because of what happened in 2008 with the regulation that came out and having to raise an incredible amount of capital to satisfy the regulators, the banks have struggled a little. Stock price has fallen to where they are trading at a discount to Book Value. This one is probably around tangible book. His favourite is Citigroup (C-N), which he feels has a good runway ahead of it.

Bought a few years ago. His target price is about double where it is now. He is glad the dividend is up. If it goes up further, the stock price should go up further. As the economy does well, banks should do well.

Took a $400 Million write-down due to legal charges. It is not such a terrible thing. They are one turn of a multiple less than the peer group. There are a number of tail winds lining up. Increase in rates, increased loan growth and an economic recovery lead by the US. He sticks to Canadian names, however.

They have to go to the federal reserve to ask if they can bump the dividend. They have to worry about capital ratios. They have to go through stress tests. They are selling assets and becoming a smaller, more profitable bank. They are primed for dividend increases now.

Has always maintained that no bull market persists without the leadership or participation of financials. The trend is up and this probably works higher.

Has been a big bull on this. Feels this is one of the cheapest areas in the whole US stock market. This bank has a lot of positive things. They have a great business on the investment banking side, which will continue to do well, a great wealth management business and a great retail banking business. A lot of the issues that were facing them from a regulatory and legal point of view are all off the table now. BV is $21 and it is trading well below this.

Bank of Nova Scotia (BNS-T) or Bank of America (BAC-N)? By owning a Canadian bank you can take advantage of the Canadian dividend tax credit, which basically means a lot. Secondly, if you are going to buy something in the US, you are paying up for it, and that implies a potential exchange risk down the way.

Thinks you are past the worse with this one. With the $70 billion settlement they have had now, they have taken the hit on the Countrywide Financial. Feels the US bank valuations are still relatively attractive. There is a lot of earnings leverage, and he expects another move out of the housing sector.

Pretty good earnings and strong quarter. Prefers JPM-N and GS-N in preference to this one as there are skeletons in this closet.

He likes the US financials in general and he likes this bank. Has been focusing more closely on some of the US regional banks such as Wells Fargo (WFC-N). He doesn’t know if he has a favourite, but you might want to start watching out for some of the multinational names because of the US$ advancing so much.

This is probably a play on the US economy. Thinks there are better large-cap names to own. They have somewhat recovered from the financial mess of 2008-2009. Dividend yield is quite low at just over 1%. There are other banks with better quality and better credit culture that will give you a better dividend yield.